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Despite down economy, Red Lake bets on new casino

While many businesses across the country are cutting jobs and halting expansion plans, the Red Lake Band of Ojibwe is doing just the opposite. The tribe is building an $18 million casino.

The upscale entertainment complex will include a 40-room, all-suites hotel and restaurant, a concert hall, 300 slot machines and eventually a golf course.

Ray BrennyMPR Photo/Tom Robertson

When the casino opens in December, it will replace an older, makeshift gambling hall in the town of Red Lake, which is frequented mostly by tribal members. The new complex will sit on the southern edge of the reservation, closer to the more lucrative Bemidji market.

Red Lake is building the casino with a loan from the Shakopee Mdewakanton Sioux community. That financing was already in place when the economy started to tank last year.

Ray Brenny, the tribe's chief operating officer for gaming, says the economic downturn has actually been good for this construction phase of the project, and not only because it's creating jobs.

"A lot of people are out of work right now and we've got some real, real good deals on a lot of the materials," said Brenny. "People are bidding on the job and the numbers are coming in great. The economy is down right now, and materials and everything else that goes along with constructing a project like this are coming in under budget."

While some tribal casinos in Minnesota are seeing a slump in revenues because of the recession, Red Lake made record profits in 2008, up 9 percent from the year before.

Buck JourdainMPR Photo/Tom Robertson

The tribe runs two other casinos in Warroad and Thief River Falls. Those facilities attract gamblers from Fargo and Grand Forks. About 35 percent of their customers come from Canada.

Some observers say building a new casino in the middle of a recession is a big gamble. But Tribal Chairman Floyd "Buck" Jourdain doesn't see it that way. Jourdain says the new facility will create 50 much needed, new jobs for the reservation. That will bring the total employed by Red Lake gaming to close to 900 people.

Jourdain says the new casino will put the tribe in a better competitive position when economic times get better.

"Where there's this very scary element of 'be careful, be careful, be careful,' we see opportunity," said Jourdain. "At this particular point we need to be more aggressive. We need to invest in our community. We need to do the opposite of what everybody else is doing, hanging on to their money. This recession is not going to last forever, and we're preparing for when it rebounds."

Gaming has been good on the nearby Leech Lake Indian Reservation, too, where the tribe's three casinos also made record profits in 2008.

Tribal executive director Rob Aitken says he's puzzled that rural reservations like Red Lake and Leech Lake are doing well, while profits are down at some of the more lucrative casinos closer to the Twin Cities.

Aitken's theory is that their casinos cater more to local customers, while the larger ones are destination attractions. People who like to gamble may skip an expensive trip to Las Vegas when they can have the same kind of fun closer to home.

Aitken says while Leech Lake has done well through the recession so far, the band anticipates a slower summer season as more Minnesotans lose their jobs and cut back on spending.

"From 2008 to 2009, we're probably going to be down, at least in our gaming revenues, anywhere from 4 to 10 percent," said Aitken. "We don't know, but we're anticipating that being down. But you have to remember, we're coming off a really good year."

While some tribes have been hit harder than others, Indian gaming experts say all casinos will likely feel the effects of the recession to some degree.

Indian gaming directly employs more than 13,000 people in Minnesota. So far, tribes in the state have managed to avoid major layoffs.